Web 2.0: The Real Opportunity Lies Ahead of Us

JP Rangaswami wrote an amazing post on his blog a little while ago: Interesting, but of no commercial value , in which he cites a series of examples of new technologies - like email and spreadsheets - that were initially considered simply interesting, rather than useful; now we cannot imagine living or working without those very same technologies. It seems likely that this will happen with today's emerging technologies, like RSS feeds, popular voting, social networking, micro-blogging, crowdsourcing and so on.

History Repeats Itself

We have already seen this happen with Web 1.0. A series of tiny, well-capitalized startups (remember Webvan? ) gained early traction online in a variety of market segments, from books to furniture to pet food to groceries. The large, established brick-and-mortar players were slow to respond.

As a result, a few Web 1.0 companies - but only a handful - did grow into large, successful companies within their domain: Amazon, EBay, Blue Nile, Expedia, Google, and so on, along with a host of second-tier players. Over the long run, though, pre-existing market leaders like Barnes & Noble, WalMart and Petsmart, were able to rebound, leveraging their strong brands and deep pockets to exert influence online and re-assert their dominance of the various segments.

There is no reason to believe that the outcome will be any different with Web 2.0 . The big established companies must enter the field for competitive reasons, either by acquiring, partnering with or replicating the smaller cutting-edge thought leaders. The game is still in the early stages; once the big brands get moving, they will be hard to stop.

Dave McClure addressed this topic in his recent incomparable blog post Web 3.0 isn't the Semantic Web, it's Hailstorm 2.0 . Of course, Dave's thought process is far ahead of mine, but he makes a similar point: the most likely winners of the Web 3.0 revolution - which he defines as an environment in which the user is always logged in even while navigating around the web -  will be vendor groups composed primarily of today's large companies like Microsoft, Google, Yahoo!, AOL, Facebook, Amazon et al.

Users - Now and In the Future

Who are the heaviest users of Web 2.0 "connectivity" tools like blogs, wikis, twitter, social networks, and so on? There are three major demographics:

• Young people in their 20s and 30s (and possibly even younger)
• Users who work in technology, or play in it (such as gamers)
• Users who live in high-tech hubs, such as Silicon Valley, Boston, New York, etc.

Taken together, these demographics represent only a fraction of the online population at large. The migration of the mainstream users is yet to come. And therein lies a major opportunity ...

As Web 2.0 technologies start to trickle outside of the core Early Adopter demographics - as they "cross the chasm" - we should see a massive increase in adoption for these technologies in both the Consumer and Enterprise space. This will lead to an increase in their value due to network effects, which are particularly meaningful for these social connectivity tools.

Companies that provide products and services to help the transition of mainstream users and facilitate their adoption in these two areas can profit handsomely from these technologies.

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Comments

[Nitin]

It is really a nice post. Keep posting.

[AVG Virus Protection]

good thoughts. I would say that the web 2.0 landscape will see a consolidation of players before dominant companies appear.

Perhaps in Web 3.0, it would be the penetration of social internet into our 24/7 life as the mobile internet becomes pervasive.

[Jeff Paul Big League Players Club]

I’ve been reading your post and found it interesting! Internet Marketing these days is spread almost everywhere in the IT world. I run a blog on Internet Marketing so I can use something from your blog as well.